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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: stock talk who wrote (12651)	1/27/1999 12:50:00 PM
From: Calvin Scott	Read Replies (1) \| Respond to of 14577

Frank, >>cut the Savage3D price on a million chips by $14.00 bring OEM price to less than $15.00. Lock up a major OEM now with a transition to the new Savage4 in the spring, you know a "road map".<< The problem with this suggestion as I see it is thus: First, cutting the prices. It may be that (and probably is) that these chips do not exist. So S3 would have to go into production to do so. Second, what do you think the likes of IBM, HP, CPQ, DELL, etc. of switching over at this point in time when they are already buying from ATI (or anyone else) at the $14 - $17 range? S3 blew it when they were late and now they are back into the product cycle that we all know takes about 24 months to move anyone out of (ala S3 taking over the Cirrus Logic graphics market). My guess is that ATI is doing everything they possibly can to hang on up to and including giving away a lot of margin. Also, they are not just going to give away this market. They are furiously working on their next generation product so they can do a smooth hand off (but they better hurry). You can bet all of our investments that Potts is jumping through all of the hoops to get market share back. The strategy you suggest, I am certain of, is in full swing. Or a least to the point of S3 trying to gain back as much market share as they can afford. Calvin Scott

To: stock talk who wrote (12651)	1/27/1999 9:47:00 PM
From: Don Earl	Read Replies (2) \| Respond to of 14577

Hi stock talk, It might be that they did do something along those lines. Inventory levels dropped a lot in Q4. I would assume they have been sampling Savage 4 with the same customers they currently have Savage wins with. I'd think those guys will want the newer version when it's available. If they can produce Savage 4 cheaper, with better yields and in a similar or slightly better performance range, it wouldn't make sense to continue with the older product. They probably did a dump with the Savage inventory on hand, decided to build up inventory of Trio for IBM, and ramp up production on the new mobile and desk top Savage 4s. I imagine there's kind of a delicate balancing act involved in the best way to use capacity without building up too much inventory or hurting margins on newer products later on. The way they went from Savage to Savage 4 less than a month after the Intel deal makes me think there may have been a few tricks in some of the Chips and Technology patents that they needed pretty bad. The missed product cycle and the apparent production problems with Savage might have been the result of trying to find an alternate solution to something someone else already knew how to do cheep and easy. I'm doing a lot of conclusion jumping here, without much to go on. S3 never goes in to much detail on what they are doing so we're pretty much stuck with guess work. Regards, Don